Wall Street closed with sweeping gains Monday, led by a sharp rally in tech and a global sigh of relief after the U.S. and China struck a provisional trade deal. The Dow Jones Industrial Average surged 1,160.72 points, or 2.81%, to close at 42,410.1, marking one of its strongest single-day performances this year. The S&P 500 gained 184.26 points, or 3.26%, ending at 5,844.17. The Nasdaq Composite rose 779.43 points, or 4.35%, to close at 18,708.3.

Driving the market’s bullish mood was a surprise 90-day tariff truce between Washington and Beijing, unveiled over the weekend after high-level negotiations in Geneva. Both countries agreed to sharply reduce punitive duties: U.S. tariffs on Chinese imports will fall from 145% to 30%, while China will lower its tariffs on american goods from 125% to 10%.

“This is a best-case scenario,” said Wedbush Securities in a client note, adding that the deal “takes a near-term recession off the table” and could pave the way for renewed highs in the tech sector and broader equity markets.

Investors appeared to agree. Futures had soared in premarket trading, and the optimism carried through the session. Tech stocks were the day’s clear leaders, buoyed by easing fears over supply chain disruptions and tariffs. tesla rallied nearly 8%, while apple and meta gained close to 6–8%. Nvidia rose 5%, continuing its rebound from recent volatility.

Chinese companies listed on U.S. exchanges also saw outsized gains. Alibaba jumped 7%, JD.com rose 5.7%, and PDD Holdings rocketed up 8.5% amid hopes of stronger U.S.-China commercial ties in coming months.

The agreement, though temporary, is significant. According to Bloomberg, China secured nearly all its demands, including the creation of a dedicated trade channel led by Treasury Secretary Scott Bessent and joint enforcement mechanisms targeting fentanyl trafficking—a gesture that could eventually lead to the removal of an additional 20% tariff on Chinese goods.

However, not all sectors participated in the rally. Pharmaceutical stocks came under pressure after President Donald Trump signed an executive order mandating a “Most Favored Nation” pricing policy for prescription drugs. The measure links U.S. drug prices to those paid by other developed nations, raising concerns about profitability and investment in research and development.

Despite mixed sentiment in the pharmaceutical sector, the broader market surge reflected a wave of risk-on sentiment. The CBOE Volatility Index (VIX) dropped below 20 for the first time since March, and the 10-year Treasury yield climbed to 4.45% as demand for safe havens receded.

Looking ahead, investor attention now turns to Tuesday’s Consumer Price Index (CPI) report for April. Economists expect headline CPI to rise 2.3% year-over-year, slightly down from 2.4% in March, while core CPI is forecast to remain unchanged at 2.8%. Month-over-month figures, however, are expected to pick up, reflecting early effects of April’s tariff shock, particularly on goods like electronics and auto parts.

Some analysts caution that the April CPI could mark a deceptive lull in inflation data. “If the monthly CPI averages 0.4% from here, core inflation could spike to 3.6% by August—and potentially 4% by year-end,” economists at Citi warned. That scenario would raise concerns about a stagflationary environment, particularly if growth continues to slow while prices accelerate.

With reciprocal tariffs set to potentially return in July, Tuesday’s inflation print could shape both market expectations and Federal Reserve policy going into summer. For now, though, the markets are basking in a rare moment of clarity and calm after months of volatility and geopolitical uncertainty.

The rally may not last, but for one day at least, Wall Street had reason to celebrate.